Second Circuit Court of Appeals Strikes Down Vermont Law on the Sale of Prescriber Data

November 23, 2010

In IMS Health, Inc. v. Sorrell, the United States Court of Appeals for the Second Circuit overturned a Vermont law limiting the sale of physician-identifiable prescription data, finding that it was an impermissible restriction of commercial speech. In doing so, the Second Circuit overturned the Vermont district court, and split with the First Circuit, which had earlier upheld such laws in Maine and New Hampshire.

Sean Flynn, PIJIP Associate Director and counsel of record for consumers and state legislators in litigation on this issue in the First and Second Circuits explained:

"Judge Livingston's dissent gets the issue just right. The
only reason that pharmacies possess prescription information is because of
government mandates that patients and doctors disclose that information as a
condition of accessing medical care. Judge Livingston explained: "Having
mandated the collection of that otherwise highly confidential information, the
state unquestionably has an interest in controlling its further dissemination."
The majority's flaw is to analogize the law instead to government regulation of
the trade of private data that the government has no role in requiring the
production of in the first instance. If allowed to stand, the ruling would strike
down provisions of the Driver Privacy Protection Act, upheld by the Supreme
Court in Reno v. Condon, the Federal
Educational Rights Protection Act, upheld by the Sixth Circuit, and bans on the
private disclosure of information obtained in civil discovery proceedings,
also upheld by the Supreme Court. Given the direct conflict with the First Circuit
in IMS v. Ayotte, in which a full panel of judges voted to uphold identical
laws in Maine and New Hampshire, this ruling is low hanging fruit for reversal -
either in an en banc decision by the full Circuit or by the Supreme Court."

The Second Circuit opinion is disappointing for patient advocates, including the National Legislative Association on Prescription Drug Prices (NLARx), who had participated in the legislation as amici. While the majority opinion discounts “any effect on the integrity of the prescribing process,” it fails to address why pharmaceutical companies would spend millions of dollars on marketing directed by this data, if prescribing decisions were unaffected.

Meredith Jacob, PIJIP's Pharmaceutical Policy Fellow and counsel to public interest amici in the Second Circuit case explained:

"The decision fails to focus on the state interest in reducing the impact that the over-prescription of the most expensive, brand-name medications has on state health care budgets, patient compliance, and health outcomes. Invasive, in-person marketing to physicians increases irrational prescribing based on persuasion and manipulation, rather than a rational evaluation of the characteristics of the patient. In an economic climate where state Medicaid programs are facing stark cutbacks and individuals are forgoing vital prescriptions because of cost, it is more important than ever that patients are certain that they aren’t paying for a more expensive medicine than necessary."